Imported Capital Goods and Economic Growth in Sub-Saharan Africa

Babajide Patrick Afuye and Abel Ariyo Awe
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Babajide Patrick Afuye: Department of Economics, Faculty of Social Sciences, Ekiti State University, Ado Ekiti, Ekiti State, Nigeria.
Abel Ariyo Awe: Department of Economics, Faculty of Social Sciences, Ekiti State University, Ado Ekiti, Ekiti State, Nigeria.

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Abstract: Worldwide, economic performance remains a key benchmark for national development, driven by factors such as investment, productivity, and technological advancement. The study investigates the impact of imported capital goods (independent variable) on economic output (dependent variable) in Sub-Saharan Africa (SSA). The specific objectives are to examine the trend of imported capital goods in the region; and analyze the trend of economic output growth, and evaluate the long-run and short-run impact of imported capital goods on economic output. The study adopts an ex-post facto research design, employing secondary data from 1991–2023 for 32 SSA countries, sourced from the World Bank in 2025. Methodologically, the study applies second-generation panel cointegration test, introduced by Westerlund (2007), since the data in this study exhibits cross-sectional dependence, the second-generation panel cointegration test was employed. The findings reveal a consistent upward trend in the level of imported capital goods across the region, contrasted with a fluctuating pattern in economic output growth. Empirical results further indicate the existence of a long-run co-integration between imported capital goods and output growth, suggesting that external capital inflows significantly contribute to productive capacity in SSA. The study is relevant to policy makers, as it emphasizes the need for policies that enhance the absorptive capacity of SSA economies, strengthen local industries, and maximize the growth benefits of imported capital goods. The implication of the findings is that imported capital goods significantly enhance productivity and output growth in SSA and policymakers should reduce trade barriers while strengthening human capital, infrastructure and industrial capacity to maximize benefits. Meanwhile, regional cooperation, technology transfer and local assembly are vital for translating imports into sustainable economic growth.

Date: 2025-08-28
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Published in Asian Journal of Economics, Finance and Management , 2025, 7 (1), pp.851-863

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